Culled—Proshare
January 14, 2019/Zedcrest Capital
***Nigeria and South Africa to recover slowly in 2019 *** – Moody’s
KEY INDICATORS
| Indicator | Value | Commentary |
| Inflation | 11.28% | As at December 14, 2018. A c.2bps increase from 11.26% recorded in October 2018 |
| MPR | 14.00% | Left Unchanged for the 12th Consecutive Time at the Nov. 22, 2018 MPC Meeting |
| External Reserves | $43.05bn | As at January 10, 2018. A c.0.00% increase from $43.05bn on January 9, 2018 |
| Brent Crude | $59.76pb | As at January 14, 2019. A c.0.95% increase from $60.54pb on January 13, 2018 |
Bonds
In line with our expectations, yields in the bond market moderated further by c.2bps, even as offers pulled further away following demand on the mid to long end of the curve, especially the 27s and 37s.
We expect yields to remain moderated for most of the week as inflows from coupon payments are expected to support bullish sentiments in the near term.
| Benchmark FGN Bonds | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 15.54 13-Feb-20 | 15.14 | 14.47 | 0.11 |
| 14.50 15-Jul-21 | 15.42 | 15.12 | (0.08) |
| 16.39 27-Jan-22 | 14.99 | 14.70 | 0.00 |
| 14.20 14-Mar-24 | 15.10 | 14.75 | 0.00 |
| 12.50 22-Jan-26 | 15.55 | 15.35 | (0.01) |
| 16.29 17-Mar-27 | 15.38 | 15.27 | (0.07) |
| 13.98 23-Feb-28 | 15.50 | 15.33 | (0.04) |
| 12.15 18-Jul-34 | 15.48 | 15.24 | (0.02) |
| 12.40 18-Mar-36 | 15.48 | 15.24 | (0.03) |
| 16.2499 18-Apr-37 | 15.29 | 15.19 | (0.10) |
Source: Zedcrest Dealing Desk
Treasury Bills
Yields in the T-bills market moderated slightly in today’s session as market players cherry-picked on some maturities in anticipation of client demand ahead of the forthcoming NTB auction. This was despite the c.25bn OMO sale by the CBN.
We expect yields to remain relatively stable on the back of expected client flows into the market.
| Treasury Bills | |||
| Description | Bid (%) | Offer (%) | Day Change (%) |
| 14-Feb-19 | 15.00 | 14.00 | 0.00 |
| 14-Mar-19 | 15.40 | 13.80 | 0.30 |
| 4-Apr-19 | 14.05 | 13.80 | 0.05 |
| 2-May-19 | 14.50 | 13.00 | 0.20 |
| 13-Jun-19 | 13.60 | 13.25 | 0.00 |
| 18-Jul-19 | 13.75 | 13.20 | (0.25) |
| 1-Aug-19 | 14.55 | 13.65 | (0.05) |
| 12-Sep-19 | 14.90 | 14.60 | (0.10) |
| 3-Oct-19 | 14.95 | 14.60 | (0.10) |
| 14-Nov-19 | 14.90 | 14.60 | (0.10) |
| 5-Dec-19 | 15.10 | 14.90 | 0.00 |
Source: Zedcrest Dealing Desk
Money Market
Rates in the money market spiked by c.12pct, with the OBB and OVN rates closing the day at 31.67% and 35.25% respectively. This came on the back of a wholesale FX intervention by the CBN which is estimated to have worsened system liquidity to c.N225bn negative as at COB today.
We expect rates to remain elevated, as there are no significant inflows expected tomorrow.
| Money Market Rates | ||
| Current (%) | Previous (%) | |
| Open Buy Back (OBB) | 31.67 | 20.00 |
| Overnight (O/N) | 35.25 | 22.50 |
Source: FMDQ, Zedcrest Research
FX Market
At the Interbank, the Naira/USD rate appreciated by c.0.02% to N306.85/$ at the spot market, while the SMIS rate remained unchanged at N358.13/$. The NAFEX rate in the I&E window appreciated by c.0.18% to N364.30/$ from N364.94/$ previously, while the cash and transfer rates remained unchanged at N360.80/$ and N365.00/$ respectively at the parallel market.
| FX Market | ||
| Current (N/$) | Previous ( N/$) | |
| CBN Spot | 306.85 | 306.90 |
| CBN SMIS | 358.31 | 358.31 |
| I&E FX Window | 364.30 | 364.94 |
| Cash Market | 360.80 | 360.80 |
| Transfer Market | 365.00 | 365.00 |
Source: CBN, FMDQ, REXEL BDC
Eurobonds
Investors’ interests on the NGERIA Sovereigns cooled off in today’s session, as yields expanded by c.7bps on average, following slight selloff on the longer end of the curve.
In the NGERIA Corps investors renewed interests for the DIAMBK 19s and Zenith 22s.
